InKine Reports Second Quarter 2005 Financial Results

InKine Pharmaceutical Company, Inc. (Nasdaq: INKP):

   Highlights

   --  Entered into a definitive merger agreement with Salix
        Pharmaceuticals, Ltd.

   --  Filed New Drug Application (NDA) for next generation purgative
        product - INKP-102

   --  Grew quarterly revenues by 16% to $5.7 million for Q2 2005,
        compared to $4.9 million for Q2 2004

   --  Generated quarterly prescription growth of approximately 23%
        for Q2 2005 compared to Q2 2004

   InKine Pharmaceutical Company, Inc. (Nasdaq: INKP) today announced
its second quarter 2005 financial results, reporting second quarter
product revenue of $5.7 million, compared to $4.9 million for the same
period a year ago. The Company was not profitable for the quarter and
six-months ended June 30, 2005 as a result of its decision to
accelerate the development and filing of its NDA to FDA for its next
generation purgative product, INKP-102. InKine incurred losses of $0.6
million or $0.01 per share and $0.3 million or $0.01 per share for the
quarter and six-months ended June 30, 2005, compared to net income of
$1.0 million or $0.02 per share for both the quarter and six-months
ended June 30, 2004.
   "During the second quarter, in addition to entering into a
definitive merger agreement with Salix Pharmaceuticals, Ltd., we
submitted and the FDA recently accepted for filing our NDA for our
next generation purgative tablet, INKP-102," said Leonard S. Jacob,
M.D., Ph.D., Chairman and Chief Executive Officer of InKine. "We
believe that although the acceleration of our research and development
efforts for INKP-102 affected our ability to be profitable for the
six-months ended June 30, 2005, if INKP-102 is approved by FDA, our
investment in this important drug will positively impact the revenue
growth of the franchise," Dr. Jacob added.

   Gross Profit:

   --  Product revenues were $5.7 and $10.9 million for the quarter
        and six-months ended June 30, 2005, a 16% and 18% increase,
        respectively, over product revenues of $4.9 and $9.2 million
        for the same periods a year ago. Prescription levels have
        escalated as a result of increased sales and marketing
        efforts, which continue to grow market awareness and
        acceptance of Visicol(R). Approximately 145,000 prescriptions
        were filled for Visicol(R) during the second quarter of 2005,
        which represents an increase of approximately 23% over
        prescriptions of 118,000 for the second quarter of 2004.

   --  In addition to product revenue, the Company realized $818,000
        in other revenue for the first half of 2005, which was
        primarily attributable to a milestone payment received from
        Zeria Pharmaceutical Company, our licensee for the use and
        sale of Visicol(R) in Japan.

   --  Gross profit was $4.8 and $10.0 million for the quarter and
        six-months ended June 30, 2005, compared to $4.6 and $8.8
        million for the same periods a year ago. Gross profit as a
        percentage of sales for product revenue was 85% and 84% for
        the three and six-months ended June 30, 2005, compared to 87%
        and 88% for the same periods a year ago. The decreases in
        gross profit as a percentage of product sales were the result
        of increased royalty expense recognized along with
        distribution costs payable to wholesalers.

   "Prescriptions grew by 25% for the first half of 2005, compared to
the first half of 2004," said Robert F. Apple, Chief Operating and
Financial Officer of InKine. "As of June 30, 2005, we had
approximately $13.0 million in cash and investments, 41 days
outstanding in receivables, sufficient inventory to meet customer
demand and no outstanding debt," added Mr. Apple.

   Costs and Expenses:

   --  Research and development costs were $2.0 and $3.8 million for
        the quarter and six-months ended June 30, 2005, compared to
        $1.0 and $2.0 million for the same periods a year ago. The
        increases were the result of development costs associated with
        the clinical studies and NDA filing of InKine's next
        generation MCC-free purgative tablet, INKP-102, along with
        higher costs related to an increased scale of development
        activity.

   --  Sales and marketing costs were $2.6 and $4.9 million for the
        quarter and six-months ended June 30, 2005, compared to $2.2
        and $4.1 million for the same periods a year ago. The
        increases were the result of continued growth in the size of
        InKine's sales force, along with increased marketing campaigns
        related to Visicol(R). As of June 30, 2005, the InKine's sales
        force covered 50 territories with five district managers,
        compared to 45 territories and four district managers as of
        June 30, 2004.

   --  General and administrative costs were $1.0 and $1.9 million
        for the quarter and six-months ended June 30, 2005, compared
        to $0.7 and $1.5 million for the same periods a year ago. The
        increases were the result of higher personnel, patent and
        insurance costs, along with increased legal and accounting
        fees associated with maintaining compliance with the
        Sarbanes-Oxley Act of 2002.

   --  During the quarter ended June 30, 2005, InKine received final
        court approval in connection with its litigation with a class
        of holders of InKine equity shares who alleged they were
        denied certain claimed preemptive rights. In addition, during
        the quarter ended June 30, 2005, InKine received final
        reimbursement from a third-party for costs incurred in
        connection with the class action litigation and accordingly,
        InKine reversed its $200,000 insurance deductible accrual upon
        receipt of the final reimbursement from the third-party.

   Balance Sheet:

   --  InKine had $13.0 million in cash and investments and no
        balance outstanding on its line of credit at June 30, 2005.

   Merger Update:

   --  As previously announced on June 23, 2005, InKine entered into
        a definitive agreement and plan of merger with Salix
        Pharmaceuticals, Ltd. (Salix) and Metal Acquisition Corp., a
        wholly-owned subsidiary of Salix. Consummation of the merger
        is subject to approval by InKine's shareholders of adoption of
        the merger agreement and approval by Salix's stockholders of
        the issuance of Salix common shares in the merger, expiration
        or termination of the waiting period under the
        Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
        amended (HSR Act) and other customary closing conditions. Also
        as previously announced, the pending merger with Salix is
        currently expected to close during the fourth quarter of 2005,
        however, InKine cannot assure you that the merger will be
        consummated.

   --  On July 19, 2005, Salix filed with the Securities and Exchange
        Commission (SEC) a registration statement on Form S-4
        containing a joint proxy statement/prospectus relating to the
        proposed merger.

   --  On July 28, 2005, InKine received notification of early
        termination of the waiting period under the HSR Act.

   About InKine Pharmaceutical

   InKine Pharmaceutical Company, Inc. is a publicly traded specialty
pharmaceutical company focused on developing and commercializing
pharmaceutical products for the diagnosis and treatment of
gastrointestinal disorders. The InKine's development strategy has been
to acquire late-stage drug candidates with short time lines to
commercialization. InKine's franchise product, Visicol(R) is the only
tablet purgative preparation indicated for bowel cleansing prior to
colonoscopy. InKine's second product, IB-Stat(R), is an oral
hyoscyamine spray for the treatment of a variety of indications.
Additionally, InKine is developing INKP-102, an advanced generation
purgative, for which we recently submitted a new drug application to
FDA for bowel cleansing prior to colonoscopy and developing Visicol(R)
for use as a laxative in treating patients with chronic constipation.
For further information, please visit InKine on its web site
http://www.inkine.com.

   This press release contains forward-looking statements, including
statements regarding our expectations regarding INKP-102 and its
potential positive impact on our revenue, our proposed merger with
Salix, including the timing of consummation, if any, of the proposed
merger, and the sufficiency of our inventory. Such forward-looking
statements are based on InKine's current expectations or forecasts of
future events. InKine's performance could differ materially from those
reflected in these forward-looking statements due to general
financial, economic, regulatory and political conditions affecting the
biotechnology and pharmaceutical industries the timing of FDA review
of INKP-102, InKine's ability to commercialize INKP-102 and grow
product revenue and the effects of the other risks and uncertainties
set forth in InKine's reports on Form 10-Q and 10-K filed with the
U.S. Securities and Exchange Commission. Given these risks and
uncertainties, any or all of these forward-looking statements may
prove to be incorrect. Therefore, you should not rely on any such
factors or forward-looking statements. Furthermore, InKine may elect
to update forward-looking statements, but InKine disclaims any
obligation to do so.

   Additional Information

   In connection with the merger between Salix and InKine, Salix has
filed with the SEC a registration statement on Form S-4, containing a
joint proxy statement/prospectus and other relevant materials.
INVESTORS AND SECURITY HOLDERS OF SALIX AND INKINE ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SALIX, INKINE AND THE
MERGER. The joint proxy statement/prospectus and other relevant
materials, and any other documents filed by Salix or InKine with the
SEC, may be obtained free of charge at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents filed with the SEC by Salix by directing
a request to: Salix Pharmaceuticals, Ltd., 1700 Perimeter Park Drive,
Morrisville, North Carolina 27560, Attn: Investor Relations. Investors
and security holders may obtain free copies of the documents filed
with the SEC by InKine by contacting InKine Pharmaceutical Company,
Inc., 1787 Sentry Parkway West, Building 18, Suite 440, Blue Bell,
Pennsylvania 19422, Attn: Investor Relations

   Salix, InKine and their respective executive officers and
directors may be deemed to be participants in the solicitation of
proxies from the stockholders of Salix and shareholders of InKine in
favor of the merger. Information about the executive officers and
directors of Salix and their ownership of Salix common stock is set
forth in the proxy statement for Salix's 2005 Annual Meeting of
Stockholders, which was filed with the SEC on April 29, 2005.
Information about the executive officers and directors of InKine and
their ownership of InKine common stock is set forth in the proxy
statement for InKine's 2005 Annual Meeting of Shareholders, which was
filed with the SEC on May 2, 2005. Investors and holders of Salix and
InKine common stock may obtain more detailed information regarding the
direct and indirect interests of Salix, InKine and their respective
executive officers and directors in the merger by reading the joint
proxy statement/prospectus regarding the merger.
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                  InKine Pharmaceutical Company, Inc.
                  CONDENSED STATEMENTS OF OPERATIONS
           (amounts in thousands, except per share amounts)
                              (unaudited)

                                          Three-Months   Six-Months
                                             Ended          Ended  
                                            June 30,       June 30,
                                        -------------- ---------------
                                          2005   2004    2005   2004
                                        -------------- ---------------

Product revenue                         $5,650 $4,891  $10,868 $9,241
Other revenue                              ---    375      818    658
                                        -------------- ---------------
   Revenue                               5,650  5,266   11,686  9,899

Cost of goods sold                        (862)  (652)  (1,710)(1,143)
                                        -------------- ---------------
   Gross profit                          4,788  4,614    9,976  8,756

Cost and expenses:
   Research and development              1,993  1,036    3,762  1,958
   Sales and marketing                   2,621  2,160    4,909  4,109
   General and administrative            1,031    692    1,908  1,477
   Withdrawn public offering and
    litigation                            (200)  (338)    (200)   229
                                        -------------- ---------------
       Operating expenses                5,445  3,550   10,379  7,773
                                        -------------- ---------------

  Income (loss) from operations           (657) 1,064     (403)   983

Interest income and expense                 80     15      140     18
                                        -------------- ---------------

   Net income (loss)                     $(577)$1,079    $(263)$1,001
                                        ============== ===============

   Net income (loss) per share - basic
    and diluted                         $(0.01) $0.02   $(0.01) $0.02
                                        ============== ===============

   Weighted average shares 
    outstanding - basic                 49,111 48,676   49,109 48,611
   Weighted average shares 
    outstanding - diluted               49,111 53,504   49,109 53,737



                       CONDENSED BALANCE SHEETS
                        (amounts in thousands)

                                               June 30,   December 31,
                                                 2005        2004
                                              ----------- ------------
       ASSETS                                 (unaudited)

   Cash and investments                         $13,018       $13,053
   Accounts receivable                            2,550         2,264
   Inventory                                      1,635         1,445
   Other assets                                     817           622
                                              ----------- ------------

       Total assets                             $18,020       $17,384
                                              =========== ============

       LIABILITIES AND SHAREHOLDERS' EQUITY

   Accounts payable and accrued expenses         $3,735        $3,016
   Shareholders' equity                          14,285        14,368
                                              ----------- ------------

       Total liabilities and shareholders'
        equity                                  $18,020       $17,384
                                              =========== ============
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